S&P Emini pre-open market analysis
Emini daily chart
- Yesterday formed an S&P 500 Futures weak High 1 buy setup; however, it is a bear bar which increases the odds of sellers above.
- The bears tried to get follow-through selling yesterday after Tuesday’s bear reversal. However, the bears used yesterday’s selloff to scalp out, and the bull started buying.
- The bull breakout last Friday is strong enough for a second leg up and a test of the February high.
- The bears want last Friday to form a wedge top. However, the bull breakout on May 18th likely reset the count. This lowers the probability of the wedge being credible.
- The bears have done a good job preventing the bulls from getting measuring gaps. This increases the odds that any upside breakout will fail and continue sideways.
- The bulls need to get a breakout with follow-through above the February high, or else, traders will assume that the market is near the top of a trading range, and any bull breakout will fail.
- Overall, the market is at the top of a trading range that has gone on for the entire year. This means traders will sell near the top of the February high, betting that any upside breakout will fail.
Emini 5-minute chart and what to expect today
- Emini is up 2 points in the overnight Globex session.
- The Globex rallied during the overnight session to near 4,200 and pulled back. This is a Big Round Number and will likely be a magnet.
- Traders should expect a lot of trading range price action today and assume that the day will remain a trading range until there is a clear breakout with follow-through.
- It is important to remember that if the day is going to become a strong bull trend day, there will be plenty of time to enter in the direction of the trend.
- It is essential to be patient in the open until one is confident in their assessment of the probabilities for both the bulls and the bears.
- The market may have to test the high of yesterday’s since it is a high 1 buy setup. As I stated above, there will probably be sellers above the bar.
- Today, you may try and close above the open of the day. The bulls will try and form a bull trend day to increase the probability of the high 1 buy on the daily chart.
- Overall, traders should be patient with the open and wait for clarity. Even if that means not trading for the first hour.
Yesterday’s Emini setups
Here are several reasonable stop-entry setups from yesterday. I show each buy entry with a green rectangle and each sell entry with a red rectangle. Buyers of both the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a near 4-year library of more detailed explanations of swing trade setups (see Online Course/BTC Daily Setups). Encyclopedia members get current daily charts added to Encyclopedia.
My goal with these charts is to present an Always In perspective. If a trader was trying to be Always In or nearly Always In a position all day, and he was not currently in the market, these entries would be logical times for him to enter. These, therefore, are swing entries.
It is important to understand that most swing setups do not lead to swing trades. As soon as traders are disappointed, many exit. Those who exit prefer to get out with a small profit (scalp), but often have to exit with a small loss.
If the risk is too big for your account, you should wait for trades with less risk or trade an alternative market like the Micro Emini.